Stock selection & indexing systems and methods

• US 20050049952A1
• Filed: 08/13/2004
• Published: 03/03/2005
• Est. Priority Date: 08/14/2003
• Status: Abandoned Application

• Current Assignee: Active Index Advisors LLC (Groupe Bpce)
• Original Assignee: Active Index Advisors LLC (Groupe Bpce)
• Inventors: Carter, Kevin Todd
• Application Number:
  US10/917,804
• Publication Number:
  US 20050049952A1
• Time in Patent Office: Days
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A system, method and software product describe a customizable, index-based stock management methodology. This methodology provides for diversification and risk control of indexing combined with individual customization and active tax management. The system employing the methodology permits individual investors to invoke investment processes that track indexes to gain specified market exposure, control risk, and minimize costs while invoking individual preferences, current holdings, or social concerns

Claims

1. The method of determining an investment portfolio, comprising:

selecting a target index of securities;

dividing the target index into a plurality of sectors;

determining a target number of securities for the investment portfolio;

determining representative securities for each of the sectors;

populating the investment portfolio with the representative securities, wherein substantially the target number of securities exists within the investment portfolio.

2. The method of claim 1, wherein the step of determining comprises determining percentages of securities in the investment portfolio based upon a number of securities and market capitalization of target index securities of each of the sectors.

3. The method of claim 1, further comprising dividing funds into reserved funds and investment finds;

and

purchasing the sampled securities using the investment funds.

4. The method of claim 3, further comprising making a subset of the reserved funds readily available to cover investment costs.

5. The method of claim 3, further comprising investing a subset of the reserved funds in a security performing substantially identically to the target index.

6. The method of claim 1, wherein the step of determining a target index comprises selecting one of (a) the S&

P 500 or any other index and (b) another known stock index.

7. The method of claim 5, wherein the step of investing a subset of the reserved funds comprises investing in exchange traded funds.

8. The method of claim 1, wherein the step of dividing the target index comprises utilizing the Global Industry Classification Standard.

9. The method of claim 1, further comprising the step of modifying the target index with an investment objective.

10. The method of claim 1, wherein the step of selecting a target index comprises the step of creating a target index based on an investment objective.

11. The method of claim 1, wherein the step of dividing the target index comprises modifying securities within each sector based upon an investment objective.

12. The method of claim 1, wherein the step of dividing the target index into sectors comprises formulating sectors.

13. The method of claim 1, wherein the step of determining representative securities comprises:

subdividing each sector into buckets; and

determining securities from the buckets based upon, at least, one or more attributes of the securities.

15. The method of claim 1, wherein the step of determining representative securities for each of the sectors comprises the step of selecting a largest security not previously selected.

16. The method of claim 1, further comprising rebalancing the investment portfolio to correct discrepancies in tracking the target index.

17. The method of claim 21, the step of rebalancing comprising the step of selling an overweight security.

18. The method of claim 21, the step of rebalancing comprising applying reserved funds to an underweight security.

14. The method of claim 18, wherein the step of determining securities from the buckets comprises redefining a number of securities for the buckets.

19. A system for determining an investment portfolio, comprising:

means for selecting a target index of securities;

means for dividing the target index into a plurality of sectors;

means for determining a target number of securities for the investment portfolio;

means for determining representative securities for each of the sectors;

means for populating the investment portfolio with the representative securities, wherein substantially the target number of securities exists within the investment portfolio.

20. The software product comprising instructions, stored on computer-readable media, wherein the instructions, when executed by a computer, perform steps for determining an investment portfolio, comprising:

instructions for selecting a target index of securities;

means for dividing the target index into a plurality of sectors;

means for determining a target number of securities for the investment portfolio;

means for determining representative securities for each of the sectors;

means for populating the investment portfolio with the representative securities, wherein substantially the target number of securities exists within the investment portfolio.